The Palm Oil Crisis
Palm Oil Crisis: Overview
What is palm oil? Where did it originate? It is a form of edible vegetable oil obtained from the fruit of the African palm oil tree (Elaeis guineensis). Palm oil trees are originally from West Africa, where they were grown as a staple food crop dating back as far back as 5,000 years. They were one of the earliest traded commodities and continue to be even today. While palm oil had a strong presence in the tropical Western African countries, its availability and usage in the international marketed came about as a result of the British Industrial Revolution. Its early usage came in the form of candle manufacturing and industrial lubricants. As the demand and usage grew for nutrient rich palm oil, the British expanded overseas trade and invested in oil palms across Southeast (SE) Asia. The first commercial scale plantation in SE Asia began in the early 20th century. At the time, 225,000 metric tons (MT) of palm oil were being exported annually from South-East Asia. Today, this figure has increased to over 50 million MT.
Where are palm oil trees found?
Traditionally, palm oil trees were planted on a small scale across Southeast Asia alongside other crops such as rice and wheat. However, to meet the ever-increasing global demand for palm oil has meant that large swaths of biodiversity-rich rainforests are being cleared to make a way for large scale palm oil production. According to Indonesia’s Ministry of Forestry maps, Indonesia lost approximately 1.3 million hectares of forest cover over the period of 2009 to 2011 alone. That is a loss of a forest cover equating to the state of Delaware in just two years or a loss of a biodiverse area equating to the state of Rhode Island per year. Indonesia is by far the world’s largest producer of crude palm oil with over 35 million metric ton of production followed by two other Southeast Asian countries, Malaysia (21 million MT) and Thailand (2.3 million MT). The annual production growth rates in these countries are 10 – 11% annually. According to Scientific American, palm oil production is the largest cause of deforestation in Indonesia as well as other equatorial SE Asian countries.
What are the current uses of palm oil? What is fueling the increasing demand?
Because of growing concerns about trans-fatty acids, many producers started looking for alternatives to partially hydrogenated vegetable oils. An added incentive to seeking alternatives was the fact that the U.S. Food and Drug Administration required food labels to list the amount of trans- fat per serving by January 1, 2006. Palm oil is inexpensive, is a semi-solid at room temperature, and is good for frying because it can withstand high temperatures. Another advantage is that the yield for palm oil is 6 times greater than canola oil, and about 10 greater than soy oil. Palm oil is now found in almost 50% of all consumer goods including cake mixes, ready- made foods, margarine, peanut butter, and cookies. The palm kernel oil is similar to cocoa oil and is used as a substitute for that fat in many chocolate products. It is also an important ingredient in animal feeds. Both types of palm oil are found in numerous non-food items such as detergents, cosmetics, greases, production of PVC, and printing inks. Ironically, palm oil is also used to make bio-fuels.
The demand for palm oil in the United States has tripled in the last five years, making the US the second largest importer. The production of palm oil has many devastating effects on the eco-rich rainforests of Malaysia and Indonesia. The rate of deforestation is staggering. Even though there is currently over 7 million acres of land in Borneo and Sumatra that has already been cleared, 4.9 million acres of rainforest are destroyed every year to make room for more palm oil plantations. By using the undisturbed rainforest, the corporations gain the added income from the timber.
Impact from deforestation on wildlife
The large-scale destruction of biodiversity-rich forest cover being replaced by palm oil trees represent a critical issue for the environment and the wildlife. These forests represent some of the last remaining wild habitats for many endangered animals, including Asian elephants, orangutans, tigers, and sun bears, among thousands of other animals that call these forests their home.
Asian elephants, in particular, are facing new threats with the expansion of oil palm plantations. Among other human-elephant conflicts, Asian elephants are now increasingly facing pressures from habitat destruction. As the elephants’ former forest homes are cut down, they lose their sources of food, water, and shelter. In addition, palm oil plantations increase human activity in the former elephant habitats. As people are expanding and building villages on and near the land once occupied by elephants, human-elephant conflicts are on the rise.
Impact from deforestation on Asian elephants
Sumatra is home to some of key population of Asian elephants outside of India and Sri Lanka. Studies show that there are less than 3,000 Sumatran elephants (Elephas maximus sumatrensis) in the wilds of Sumatra. Sumatran elephants represent one of the three recognized subspecies of Asian elephants are listed as critically endangered species under the International Union for Conservation of Nature (IUCN). According to WWF, the Sumatran elephants have lost nearly 70% of their habitat nearly 50% of its population since 1985. Sumatra has lost over two-thirds of its natural lowland forest in the past 25 years. These forest covers represent prime habitat for the elephants and clearing of the forest cover has resulted in local elephant extinctions in the country. Palm oil tree plantations are the main drivers of this deforestation and loss in habitat.
The impact from deforestation has not been limited to habitat loss, there are increases instances elephants being killed inside and outside of protected areas. Palm oil tree plantation owners attack elephants as a retaliatory measure for harm caused by elephants to “their” plantations. Tesso Nilo National Park in Sumatra is a protected area however, there have been continuous attacks on elephants near the park. WWF-Indonesia has documented over 100 elephant kills in the region since 2004. Due to significant lack of enforcement from the Government, illegal plantation owners are encroaching the national park boundaries and poisoning elephants in the region. To drive elephants out of their native lands, plantation owners often retaliate by injecting toxic substances into fruits or spreading it on leaves. These poisons are not difficult to obtain—palm growers can purchase them in over 30 shops around the park. At this rate, scientist estimates that the Sumatran elephant will be extinct in the park in less than 10 years and in the wild in less than 30 years.
Borneo is an island in the Southeast Asia jointly shared by Malaysia, Indonesia, and a small island nation of Brunei. Borneo is a home to one of the three subspecies of the Asian elephant, the Borneo elephant (Elephas maximus borneensis). There are approximately 1,500 individuals left in the wild, according to the latest estimates. The Bornean elephants are also suffering from a similar fate as their Sumatran cousins. Rampant logging, clear-cutting of forests for palm oil plantations, and ever expanding human settlements in the island are hampering the population sizes of these elephants.
The Bornean pygmy elephants are restricted to the Northeast region of Borneo in the state of Sabah. Despite being one of the largest remaining continuous elephant habitats in Asia, Sabah’s pygmy elephants are also going through crisis. According to WWF-Malaysia, Sabah has lost nearly half of its original forest cover over the last four decades. There are continues pressures on its resources from industrial agriculture in the region. Some of the most serious pressure comes from the Government itself due to its growing emphasis of producing palm oil as a biodiesel.
Similar to other elephant range countries, habitat loss has been a catalyst for increased human-elephant conflicts in the Sabah region. Palm oil plantation workers often install illegal snares to trap small game animals from the nearby Lower Kinabatangan Wildlife Sanctuary. Due to their relative smaller size compared to their other wild Asian elephant cousins, the pygmy elephants have paid the price by getting caught in snares meant for other animals. There have also been instances of elephant poisonings in the area, which have wiped out entire herds at a time. In 2015, 14 pygmy elephants were poisoned within a four-week span on government owned wood and palm oil plantations. In retaliation for damaging plants and eating palm oil fruit, the plantation owners poisoned the entire herd. Retaliatory poisoning is not only limited to adult elephants, but often claims the lives of babies, creating a substantial threat to the future of these gentle giants.
What makes palm oil an attractive option as a crop?
Palm oil is considered to be the most efficient oilseed crop in the world. The below chart from Oil World (Germany based independent data provider for oilseeds and oils around the world) highlights why palm oil is such a lucrative option for plantation owners across southeast Asia, even at the cost of loss of biodiversity. Oil palm produces two different types of oils: palm oil and palm kernel oil. Both types of oils have a wide usage and demand across the world. Also, when compared to other vegetable oil, palm oil’s unique chemical composition gives it a longer shelf life. Unlike other vegetable oils, palm oil is naturally semi-solid and does not need to undergo hydrogenation to make it suitable for solid applications. This makes it more lucrative and profitable for the producers to prefer palm oil versus other seedoil crops.
What do the crisis mean to the US residents and people living outside of Southeast Asia?
Despite being thousands of miles away from Southeast Asia, we all are critical stakeholders in the palm oil crisis. Our per capita consumption for oil and fats is among the highest in the world (Figure 2). for the use of palm oil is much more widespread than many of us realize. Some the common usage of palm oil includes but, are not limited to: pizza, ice cream, laundry detergent, instant noodles, chocolate, cookies, soaps, biodiesel, cosmetics, various snacks, bread, and margarine. These are product we use on a daily basis and include more than thirty different palm oil derived ingredients. More information on commonly found palm oil based ingredients can be found here.
The figure below highlights the dominance of palm oil in the world for oil and fat consumption. This is fueled by the growing consumer demand as well as the increased industrial usage of palm oil such as biofuels and animal feed.
What is being done to ensure sustainable palm oil plantation and production? What is the RSPO?
In 2004, the Roundtable on Sustainable Palm Oil (RSPO) was formed to promote the use of sustainable palm oil through credible global standards and engagement of stakeholders. The stakeholders include: oil palm growers, palm oil processors and traders, consumer goods manufacturers, environmental NGOs, social NGOs, banks/investors, and retailers. The RSPO is a voluntary membership-based organization and has the following 8 principles for certification for palm oil growers:
· Commitment to transparency
· Compliance with applicable laws and regulations
· Commitment to long-term economic and financial viability
· Use of appropriates by growers and millers
· Environmental responsibility and conservation of natural resources and biodiversity
· Responsible consideration for employees, and of individuals and communities affected by growers and mills
· Responsible development of new plantings
· Commitment to continuous improvement in key areas of activity
The RSPO has an overall goal of transforming the palm oil industry in collaboration with the global supply chain, to put it on a sustainable path. According to the RSPO’s website, the organization has developed a set of environmental and social criteria which companies must comply with in order to produce Certified Sustainable Palm Oil (CSPO). When they are properly applied, these criteria can help to minimize the negative impact of palm oil cultivation on the environment and communities in palm oil-producing regions. Currently, 17% of palm oil production is certified by the RSPO. There are approximately 3,045 RSPO members including: WWF, Unilever, Nestle, L'Oréal, Walmart, Procter & Gamble, Hershey’s, and Starbucks. RSPO’s palm oil producer members are mainly from Indonesia (50%) and Malaysia (40 %).
What are some of the challenges to the RSPOs model and its effectiveness at stopping unsustainable palm oil production?
· RSPO does not prohibit forest conversion to palm oil plantations : its members are directed to ensure forests are assessed for high conservation values (HCV). This has meant that any forest not identified as primary or HCV is permitted to be cleared under the RSPO certification. According to Greenpeace, Sumatra has large quantities of secondary or “degraded” rainforests and are therefore available for industrial usage. Despite its conservation value and impact on the climate (impact from the release of carbon stock), RSPO would certify these forests for “sustainable” palm oil plantation.
· Despite peatlands in SE Asia being some of the world’s most important carbon stores, the RSPO doesn’t limit greenhouse gas (GHG) emissions associated with the conversion of peatland for the development of palm oil plantations.
· The RSPOs enforcement of its standards and action related to the breaches of these standards have been found questionable by the Greenpeace and other local NGOs operating in the SE Asia.
· There are questions over the mechanisms by which RSPO certified palm oil is traded and the comprehensive traceability of the supply chain. For example, RSPO members can freely trade fresh palm oil fruit bunches and oil produced by non-members who may have no sustainability commitments.
Should corporate consumers disregard the RSPO?
Corporate consumers can use the RSPO standards as a basis, but should go beyond them utilizing their own audit mechanisms to ensure that the link between palm oil and deforestation is broken. Simply relying on the RSPO certifications to serve as comprehensive guidelines for sustainable palm oil sourcing is inadequate. However, the RSPO remains the largest body that connects key stakeholders. While RSPO’s standards on forest conversation and their enforcement may not be adequate, it is still better than no standards. Rather than ignoring the RSPO, companies should set their own rigorous standards for their palm oil supplier base. This would not only ensure sustainable plantations and mitigate the impact on biodiversity in the region, but also strengthen the supply chain for the companies involved. By setting industry standards, companies can stand out in the market against competition and would also boost their corporate social responsibility commitments.
As consumers how can we make a difference and ensure sustainable palm oil purchasing?
As informed consumers, we should demand strong enforcement of sustainable plantation standards from the companies which source palm oil. These companies include (but are not limited to) : Wal-Mart, Starbucks, McDonalds, Dunkin Donuts, Subway, Whole Foods, Costco, Target, Kellogg’s, PepsiCo, General Mills, Uniliver, Nestle, Kraft, Colgate-Palmolive, P&G, Avon, and L’Oréal. We must continuously demand transparency of the supply chain involving palm oil products.
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